AUD 2

Question 1

For governmental financial audits, auditors are required to report:

Answer 1

All instances of illegal acts (ie, noncompliance), unless clearly inconsequential
All instances of fraud
Material violations of provisions of contracts or grant agreements
Instances of abuse that could have a material effect on the F/S

Question 2

Objective of Audit

IR and CR described

Answer 2

The objective of the audit is to obtain evidence that enables the auditor to form and to express an opinion as to the fairness of F/S.

The Assessment of IR informs the auditor as to the susceptibility of information to misstatement and, therefore, the importance of controls.

The assessment of CR tells the auditor the degree to which controls add to the reliability of f/s, and therefore the RMM (the main objective).
When looking at controls, auditor will determine if they’re working as intended to (designed).
As a result of this, they may determine that the controls can’t be relied on.